Finance
Third country carbon price adjustment
When and how a carbon price effectively paid in the country of origin reduces the number of CBAM certificates an authorised declarant must surrender.
Direct answer
Where a carbon price has been effectively paid in the country of origin on the embedded emissions of CBAM goods, the authorised declarant may claim a reduction in the number of CBAM certificates to be surrendered, subject to evidence and verification. Free allocations and rebates are excluded.
What counts as a carbon price
An eligible carbon price is one that is effectively paid on the embedded emissions in the country of origin, in the form of a tax, levy, fee, or emissions allowance. The price actually borne by the producer is what counts; rebates, exemptions, and free allocations reduce the eligible amount.
Evidence the declarant must keep
The declarant must keep documentary evidence of the carbon price effectively paid, certified where required by the Regulation, for the standard record-keeping period. The supporting evidence is part of the annual declaration verification.
Interaction with India and other non-EU schemes
The adjustment is mechanism-neutral. A jurisdiction operating an emissions trading scheme, a carbon tax, or another carbon pricing instrument can supply eligible evidence if the producer actually paid a price on the embedded emissions. The Indian Carbon Credit Trading Scheme is at an early operational stage at the time of publication.